Solar Panels Get Cheaper
With Congress considering both a cap on carbon dioxide emissions and renewable energy requirements for power companies, utilities are trying to figure out how they'll produce clean energy. One increasingly viable option: solar panels. Solar is still several times more expensive than wind or natural gas and many times pricier than coal, says John Rowe, CEO of Chicago-based utility giant Exelon (EXC). "But solar is where costs are improving the fastest." One reason: Supplies of crystalline silicon, the base material used in most panels, are plentiful, thanks to climbing production capacity. On June 8, analysts at Barclays Capital (BCS) said they expect output in 2010 to top 138,500 metric tons, 13% more than originally predicted. At the same time, solar panel factories are now more cost efficient. In a recent issue of Science, the president of panel maker SunPower (SPWRA), Richard Swanson, says it will be possible to make crystalline solar panels for $1 per watt in five years, down from about $1.90 today. Competing thin-film (non-crystalline) panel makers say their somewhat less efficient product will get down to 70 cents per watt.
Either way, the solar power industry is closing in on the long-sought goal of "grid parity"—making electricity for a price that's competitive, at least in high-priced U.S. markets such as California, where energy is typically produced with natural gas at about 12 cents per kilowatt hour. Clean technology research firm Clean Edge predicts partial parity by 2015.
"We think this opens up a huge market," says Christopher O'Brien, head of market development at Oerlikon Solar, a Swiss maker of equipment to produce thin-film panels. A short-term problem for the recession-battered solar industry: Many deals are on hold as customers wait to see if they can get stimulus money.
Nickel-and-Diming Air Travelers
While many U.S. airlines were in the red in the typically slow first quarter—the 10 largest carriers lost a collective $1.7 billion—the setback was far less serious than analysts forecasted, sparking a rally in airline stocks. Cheap fuel helped, but there was another reason for the better-than-expected results: incidental income streams.
The real cash cow these days is the frequent-flier programs, says Tim Winship, who helped develop such programs for Singapore Airlines and Hilton Hotels and now runs FrequentFlier.com. Winship estimates that the three largest carriers—Delta (DAL), United (UAUA), and American (AMR)—each generate roughly $1 billion annually from the sale of frequent-flier miles to hotels, rental-car companies, and others offering points-for-miles to their customers.
It's a revenue stream that's almost pure profit, since the marginal cost of transporting a free passenger is basically a can of soda, a bag of peanuts, and the incremental fuel cost—a little less than 3 cents a mile at current prices, or about $38 for a round trip between Chicago and New York. That's less than a tenth of the $500 to $1,000 an airline collects by selling the points needed to win one free seat. "This is a very profitable business—more profitable than the flying itself," says Winship.
Airlines are also raking in revenue from their most recently imposed fees. Jay Sorensen, president of IdeaWorks, an industry consulting firm, estimates that United will pocket $300 million in extra revenue this year from its recently added baggage fees. And Sorensen expects a proliferation of the fees some airlines charge customers who seek more legroom, given how lucrative these charges are proving for such early adopters as US Airways (LCC). That carrier, he says, will probably generate an extra $50 million a year from passengers paying to sit in an exit row. Industry experts predict airlines will roll out more á la carte fees—for everything from early boarding and fast-track security screening to the right to sit next to an empty seat.
What's Reviving Scotts' Turf
First Lady Michelle Obama isn't the only American who's getting grubby in the garden. According to a survey by the National Gardening Assn., some 43 million U.S. households plan to grow their own fruits, vegetables, and herbs, up 19% from last spring.
The growth in green thumbs has lifted Burpee's vegetable seed sales 30% so far this year. Another beneficiary is Scotts Miracle-Gro (SMG), the $3 billion Marysville (Ohio) maker of fertilizer, grass seed, and other garden products. After a horrible 2008 that included cold spring weather, high nitrogen and potassium costs, and an embarrassing recall of four herbicide products not properly registered with the Environmental Protection Agency, Scotts saw its sales to retailers climb 18% in the first quarter of 2009.
Now the company is trying to bolster the brand further, spending more of its marketing budget on local advertising timed to coincide with the start of each region's growing season.
Also helping to boost sales: new products such as EZ Seed, a mix of fertilizer, seed, and growing medium that allows homeowners to get lush lawns with less water. "Consumers want to garden more than ever," says Scotts CEO Jim Hagedorn, and not just to save a bit on food bills. "It's an anti-depressant."